The most powerful woman in children's bookselling is exasperated. "Never," she says, curling her manicured hand into a fist, "Never. Get. Involved. With. Government."

Some months ago, Seni Glaister decided children's literature didn't have the prominence it deserved. No Booker. No Oscars. Yet Britain's children's writers are the best in the world. So she called on the Southbank Centre with her business partner, Ted Smart, and suggested a joint venture, a children's festival sponsored by their company, The Book People.

After some hesitation - the Southbank hadn't heard of The Book People - the ball started to roll. Musicals, readings, book-swaps, stand-up comedy, superhero workshops: 10 days of treats have now been scheduled. The merriment culminates on February 23 with a banquet for the cream of children's writing: Jacqueline Wilson, Julia Donaldson, Michael Morpurgo, Anthony Horowitz and 400 others.

Various celebrities have been asked to nominate a book they loved as a child (Mark Haddon has chosen The Wind in the Willows, George Osborne Stig of the Dump). Glaister planned to give the books to children in the care system, but she reckoned without officialdom. "Turns out the stories can contain no longing, no loss, no absence, no missing parents..." Her eyes roll. "So these kids are banned access to just about every great book ever written for them. Have you heard anything more insane? I mean, all the best stories start by getting rid of mum and dad so the adventures can begin."

The tale illustrates Glaister's feel for what people like to read - and her zeal. The combination has brought her a long way since she nursed her new baby in the Godalming kitchen of an unemployed neighbour, Ted Smart, while he mused on the business potential of door-to-door bookselling. She was 21, a single mother, and as Smart's former babysitter, she agreed to work for him three days a week for a tenner. "I never did less than six days a week for him after that," she says. "One day I'm going to bill him for my overtime."

Twenty-four years on, the company they built together sells 22million books a year and has absorbed Red House Books, the Puffin Club and a slew of competitors. Turnover is £107million and Glaister is worth £10million. She drives an Aston Martin, and the champagne, fireworks and marching bands of Book People parties are the envy of rivals. "No one knows children's books better than Seni," says Amanda Ross, producer of the TV Book Club. "They know more about bookselling than anyone else," adds Anthony Horowitz. "Much more."

Given her sway, Glaister is surprisingly shy: she's reached the age of 45 without giving a solo interview. When we meet in the Ivy Club, her London base, she's reluctant to leave Ted's side. They make an unusual team, she poised in a black cocktail dress and red high-heeled boots, he twinkly-eyed and expansively hail-fellow. "I really don't want to position myself as powerful," she says, when I finally prise her away. "It's a lot easier to be effective if you stay a little bit invisible."

The adjective could apply equally well to the Book People's business model, which she describes as "physical, grassroots, low-tech". The company has 450 self-employed reps, who drop in at workplaces across the country. They leave a boxful of books, all far cheaper than their recommended retail price. After a week, they take the orders and deliver. The reps, says Glaister, are as familiar in their areas "as milkmen", if considerably richer: a successful rep can earn more than £100,000.

The numbers involved are colossal, driven by those low prices: last year The Book People sold 250,000 cook books by Jamie Oliver, 130,000 by baking model Lorraine Pascale, plus 120,000 books of poetry. In a world where a new novel rarely sells 1,000 copies, this gives them vast power. "They are the biggest customer for an awful lot of British publishers," says literary agent Jonathan Lloyd.

As a result, Glaister's reaction to an early proof copy is as anxiously awaited as the twitch of a Roman emperor's thumb. If she dislikes a cover or takes against an intro, editors will tweak rather than lose the chance of 40,000 advance sales. If she's keen, success is - almost - assured. A Stolen Life, Jaycee Dugard's account of her 18-year abduction by a paedophile, sold 80,000 copies through The Book People, 20,000 through the trade.

"Misery is very popular with our customers," she says. "But it has to be far-removed misery, something that's unlikely to happen to them. Not childhood cancer." She takes maternal pride in the television success of Call the Midwife, based on Jennifer Worth's memoirs of working in the East End. "We spotted that five years ago, and it became one of our 2007 bestsellers."

Glaister chooses the debut fiction herself, writes the catalogue blurb, reads two or three new novels a week and the same number of children's books. She can't afford mistakes. "My worst time of year is the end of August, when we have £30million worth of stock in the warehouse up in Bangor and I'm lying awake wondering if we've chosen the right titles."

As Amanda Ross observes: "Seni has to put her money where her mouth is. If she believes in what you do, she has to bloody well sell it." When Ross set up Channel 4's Lost For Words literacy campaign, Glaister ensured that every child who wrote in for a free set of reading materials would get them. More recently, The Book People started supplying Voluntary Reading Help - the charity highlighted by the Evening Standard's literacy campaign. Doesn't she think it strange that literacy should be such a problem these days, given that books have never been cheaper or more available? "Look, we've got both parents working. Time is short. We've been tricked as a society into thinking we can compensate our children with stuff. And we can't. That's why what the Standard's doing is so important."

Her own experience as a working mother clearly shapes her thinking: the customer base is dominated by working women who buy for their kids. "It's probably a little bit of guilt. They take home a book they hadn't planned to buy so they can read it to their children in the evening."

Glaister herself has four children and sent her oldest - now 23 - off to boarding school so she could concentrate on her job. "I was working my socks off. But I don't regret sending him away and nor does he." She tries to ensure her younger three - aged six, 10 and 13 - never regard her as an absentee: "I always make their birthday cakes. And their Halloween costumes." In return they give her reading tips. She was in tears recently over a new novel for teenagers, prompting her six-year-old to say: "Mummy, if it makes you so unhappy why don't you read something else?"

A bookworm since childhood, when her parents would leave her alone in their car with a story to read while they partied, she's funny about the pitfalls of indiscriminate literary voracity. "I remember loving Enid Blyton but I had no idea what to read after the Famous Five, so I just picked up the book on the shelf above, which was Harold Robbins. I was about 11, I think, and it came as a bit of a shock." This generation of teens, she says, is luckier. "They've got so much more to bridge that gap: Twilight, the Hunger Games, really exciting stories specifically for young girls or teenage boys."

Even now, she shelves her books at home in immaculate order and has an unfashionable distrust of e-books. "I read them, but I always feel a bit cheated. I want the book itself, the physical object. We're going to bundle together e-books with physical books for our customers soon, so they can have them in both formats for convenience. See how that goes." She hates lending books - "I'm always a little shocked at the ease with which visitors will take a book off a shelf and take it home with them. I can't imagine the same people disappearing with a CD or a piece of china, and I value my books much more highly than either of those things" - but loves to "force" them on people, keeping extra copies of favourites such as Barbara Kingsolver's The Poisonwood Bible to press on likely converts.

And what about the gifts she receives? She's cradling a signed limited edition of the latest novel by Haruki Murakami - a present from his publisher - and she insists, smiling broadly, that she's not planning to return it. "Because I'm obsessed by Murakami."

I assume she's besieged by debut writers desperate to catch her eye. She shakes her head, mock-rueful: "You hear stories about proof novels with airplane tickets tucked in as book marks, but they've never been sent to me. I must be doing something wrong, eh?" Possibly. Or something very, very right.